US Crude Oil and Gasoline Inventories Move in Opposite Directions

Crude oil prices have rallied almost 80 per cent from 2016 low of $27.55 touched in January and is now holding comfortably above $49.00 handle and hence, seem more likely to extend its near-term upward trajectory.

“The API crude inventory number is very bullish”, Angus Nicholson, an analyst at IG in Melbourne, said by phone.

Also last month United States oil producer Pioneer Natural Resources announced plans to add up to 10 new rigs when the oil price recovers to $50.

“The oil market continues to deliver its share of surprises, with low prices driving disruptions in Nigeria, higher output in Iran and better demand”, Goldman Sachs analysts said in a statement.

But gains in oil were capped as the US dollar hovered near an eight-week high against a basket of currencies. Analysts polled by The Wall Street Journal had expected a decrease of 2.5 million barrels.

At the Multi Commodity Exchange, crude oil for delivery in June rose Rs 40 or 1.20 per cent to Rs 3,368 per barrel in a business turnover of 9,617 lots.

US crude stocks fell last week as imports dropped and refineries cut output, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday.

Brent advanced 38 cents to $50.12 per barrel by 0650 GMT, its largest since November 5.

Inventories declined after Canada, the biggest supplier of crude to the US market, suffered widespread outages during weeks of vicious wildfires.

This is due to the talks organised by the Organisation of Petroleum Exporting Countries (OPEC) earlier this year, in an effort to reach an agreement on a freeze on oil production.

“However, supply issues do remain as Iran has been increasing its production while Saudi Arabia has indicated it might raise production further in 2016”.

Supply disruptions caused by a major wildfire in Canada and a rising global demand are the main causes of this surge.

A source at oil producer Chevron said on Thursday its activities in Nigeria had been “grounded” by a militant attack, worsening a situation that had already restricted supply.